Bitcoin ATMs have provided both convenience and concern in the cryptocurrency space as fraudsters take advantage of unsuspecting individuals. Authorities in the United States and various jurisdictions are now taking action against crypto ATM fraud.
California Adopts New Cryptocurrency Rules
California has introduced regulations governing cryptocurrency transactions. Governor Gavin Newsom signed Senate Bill 401, which limits cryptocurrency transactions at ATMs to a daily limit of $1,000. Starting in 2025, the maximum fee charged by these ATMs will be either $5 or 15% of the transaction value, whichever is greater.
Previously, some Bitcoin ATMs allowed transactions of up to $50,000 with fees ranging from 12% to 25% above the market value of the digital asset. The primary goal of these changes is to protect individuals from fraud and exorbitant fees, as expressed by Senator Monique Limón, one of the co-authors of the bill.
The misuse of Bitcoin ATMs by fraudsters has raised significant concerns, with the Federal Trade Commission reporting that more than 46,000 individuals have lost more than $1 billion to cryptocurrency scams since 2021. The purpose of the revised transaction limits is to give potential victims greater opportunities to detect fraud before they suffer financial losses. However, Charles Belle, representing the Blockchain Advocacy Coalition, expresses concern that these regulations could have a negative impact on the cryptocurrency industry and small businesses.
FBI issues warning about Bitcoin ATMs and QR code scams
The FBI has issued a warning about fraud schemes that manipulate cryptocurrency ATMs and Quick Response (QR) codes for payments. These schemes take many forms, including online impersonation, romance scams, and lottery scams, all of which use cryptocurrency ATMs and QR codes as tools.
Cryptocurrency payments are facilitated by QR codes that can be scanned with smartphone cameras. However, criminals are increasingly using QR codes to trick victims into making payments. Victims are usually instructed to withdraw funds from their accounts and then use a QR code provided by the fraudsters to complete transactions at physical ATMs with cryptocurrencies.
After the payment is made, the cryptocurrency is transferred to the fraudster’s wallet. Recovery is almost impossible due to the decentralized nature of cryptocurrencies. The FBI has outlined some tips to protect yourself from these schemes, stressing the importance of caution, verification and avoiding transactions with cryptocurrency ATMs that promise anonymity with just a phone number or email address.
